The thought of not being able to spend your money as freely as you have in the past can spark feelings of anxiety and dread. Many people experience apprehension before adopting a budget that allows them to pay bills in a more reliable manner. Budgeting will give you a more organized approach to paying bills and saving money. To develop an efficient budget, you need to review your financial situation and make changes based on what you make and spend.

Figure out how much you earn each month and how much you spend on necessities such as rent, utilities, car payment, food, insurance, hygiene and medical expenses. Breakdown your expenses in each category to get a realistic sense of what these items cost. Look closely at what you spend on luxury items such as eating out, going to the beauty salon and going on trips or out for drinks. Add up how much you spend on unnecessary items and services.

Enter your monthly expenses into a spreadsheet program such as Microsoft Excel. Organize your expenses into categories such as “housing costs” and “food costs.” Calculate expenses using formulas within the spreadsheet program or using a calculator to find out how much money you need to put aside each month for bills and necessities. For bi-monthly or semi-annual expenses, such as car insurance, ascertain how much you need to save each month so you don’t have to come up with the money all at once. Use your budget to estimate how much you have left to spend on luxury items each week or month.

Devise a strategy reflecting changes you need to make to your lifestyle based on your earnings and expenses. Plan to cut back on non-essential spending if these expenses break your budget. If you find that your car payment or rent doesn’t fit your salary, consider moving to a new home or buying a less expensive car so you can pay your bills on time and save money on a regular basis. Be sure to include a contingency in your budget for unforeseen emergencies, such as car repairs.

Tips

When you go out with friends, participate in inexpensive activities, such as spending the day in the park or watching a rented movie, to reduce your expenditures on luxury items and services. Look online for cheap or free events going on in your town so you can go out and have fun without spending a lot of money.

Look for deals or coupons online and in weekly ads to use for luxury items as well as basic necessities such as food, clothing and hygiene products.

Warnings

Create a budget that includes money you will save each month. Plan to save on a regular basis so you’ll have money on hand when emergencies arise.